EFFECTS OF BAD DEBTS ON BANK PERFORMANCE IN NIGERIA (A STUDY OF UNITED BANK FOR AFRICA (UBA) PLC

ABSTRACT The banking sector plays a vital role in the economic development of any nation by facilitating financial intermediation and providing credit to businesses and individuals. However, the issue of bad debts has continued to pose significant challenges to the performance and stability of banks in Nigeria. This study examined the effects of bad debts on bank performance in Nigeria using as a case study. The research aimed to determine how non-performing loans influence profitability, operational efficiency, and financial sustainability within the banking sector. The study adopted a descriptive research design. Primary data were collected through structured questionnaires distributed to selected staff members of the bank, while secondary data were obtained from academic journals, textbooks, and financial reports. The data collected were analyzed using simple percentage methods and statistical tools to test the formulated hypotheses. Findings from the study revealed that bad debts significantly affect bank performance by reducing profitability, weakening liquidity positions, and increasing credit risk exposure. The study further established that effective credit risk management strategies, proper borrower assessment, and strict monitoring of loan portfolios are essential for minimizing bad debt occurrences. Based on these findings, the study recommends that banks should strengthen their credit appraisal processes, improve risk management systems, and adopt modern financial monitoring technologies to reduce the incidence of bad debts. The research concludes that controlling bad debts remains a critical factor in ensuring sustainable banking performance and financial stability in Nigeria.